National Australia Bank has said it will turn off “grandfathered commissions” for its advisers as the country’s Royal Commission into the banking sector continues to reverberate.
In a letter today, NAB says it has agreed to all 10 of the Royal Commission’s recommendations for financial advice.
So called grandfathered commissions – trail remuneration on legacy policies pre-dating Australia’s equivalent of the RDR in 2013 – will be removed by the bank as it moves to a “fee-for-service model”.
Clients will benefit from a rebate or fee reduction backdated to January 2019, the bank says.
The firm’s financial advisers will implement new annual renewal and payment agreements for every client from 1 April to replace current ongoing fee arrangements.
The bank has also agreed with a recommendation to improve the way it discloses its “lack of independence”.
The remaining recommendations addressed in a statement from the bank today include new systems for disciplining advisers and reporting compliance concerns, with the bank backing calls for a review in three years’ time to see how the Royal Commission’s measures have improved the quality of advice.
The Commission’s proposals were set out for the Australian advice market after issues such as clients being charged for no service, deceased clients being charged ,and data breaches at the major banks that dominate the market emerged.
NAB chief executive Philip Chronican says: “The Royal Commission’s recommendations will help lead to a better, more customer-focused industry as organisations change in response. The Commission has also rightly challenged NAB to close the gap between where we are today and where we need to be.
“We have to focus on earning back trust and this includes the actions we take in response to the final report and other issues we have faced at NAB.
“It includes how we compensate customers when we get it wrong; how we pay our people; how we hold ourselves accountable for running the bank and; how we build a culture that puts customers first every time.”